After a spectacular Christmas for HODLers, with BTC over $28,000, there are growing concerns about tighter regulation in 2021
Bitcoin (BTC) had an incredible week: it reached a new All-Time High at $28,400 and stayed very close to this level. What will happen next?
Cointelegraph presents five factors that could help us understand the direction of the market this week after a spectacular Christmas.
Gold on the rise after Trump’s stimulus approval
After approval by Congress, U.S. President Donald Trump has agreed to sign the economic aid bill to counter the impact of the coronavirus: it is a series of measures with a total of $900 billion.
The package, which will add a large amount of debt to the Federal Reserve’s balance sheets, includes various benefits for businesses, but will not provide Americans with the same level of direct financial support as provided in last March’s bill.
Initially, Trump had said he was against the proposal because of the too low amount of the grant check ($600 versus $1,200 at the beginning of the year), but he later changed his mind.
The markets thus started the new week on a positive note, with slight gains on S&P 500 futures before Wall Street opened. In addition, gold also rose substantially, with data showing that the precious metal could soon end its best year in the last decade.
Compared to the end of November, the XAU/USD pair has increased by 6.25%.
The „gold bug“ Peter Schiff, a known detractor of Bitcoin, wrote on Twitter at the same time as the bill was passed:
„As president @realDonaldTrump has only vetoed nine bills, the lowest number since Warren Harding, who served only two years as president, from 1921 to 1923.
Not since Chester Arthur (1881-1885) has a president vetoed fewer bills during a full term. You can’t drain the swamp by making it deeper.“
More regulations coming for Bitcoin?
According to some analysts, after hitting a new all-time high at Christmas, Bitcoin may soon face tighter regulations.
With a value of $28,400 and a monthly gain of 55%, Bitcoin is now in the crosshairs of regulators as its mainstream appeal is growing. Its supporters also believe that the coming year could prove to be complex.
Outgoing Treasury Secretary Steven Mnuchin sought to impose new regulations on noncustodial wallets and his replacement, Janet Yellen, is unlikely to see things differently.
Meltem Demirors, chief strategy officer at digital asset manager CoinShares, told Bloomberg on Sunday:
„In general, I think we’ve had a little more difficulty with the Democrats – they prefer more regulation, more oversight. I’m a little concerned about the direction things are going.“
As always in the U.S., the patchwork of political alliances means that an attack on one side could be mitigated by the presence of crypto-friendly figures elsewhere. The new chairman of the Securities and Exchange Commission (SEC), Elad Roisman, is very supportive of the industry’s development.
The fact that Bitcoin fell after reaching $28,400 is „very healthy“
In the face of what has happened over the past few days in Bitcoin’s spot market, Monday should be a very important day. After peaking at $28,400 on Sunday, Bitcoin has dropped slightly, as many expected.
Cointelegraph Markets analyst Michaël van de Poppe summed up the situation on social media as follows:
„Bitcoin has undergone a very healthy correction against its vertical trend. It might be the temporary top for now.
What will happen next? Consolidation, lateral price movements, less volatility. There will be room for other markets to pick up the pace. BTC pairs are doing well.“
BTC/USD pair hourly chart
Van de Poppe emphasizes the potential of altcoins. In his opinion, signs of an impending „altseason“ are already starting to show:
„After #Bitcoin finishes its run (at the moment vertical), money will flow to the coins with the largest cap. And after that to mid caps and small caps.
Altcoins are not dead, the money flow is still the same.“
Posted in Bitcoin